The 100% Auction

Cap'n Trade would work like this. The government would require companies to obtain permits that give them the right to emit a fixed amount of greenhouse gasses. The limit on emissions (the cap) would be gradually ratcheted down over the years until the overall amount of schmutz reached some agreed-upon level. A relatively clean company could sell (trade) its unused rights to pollute to a dirtier company.

The candidates have not said how they would distribute these permits. But they only have two choices. The government could auction those mandatory licenses, a process which would look an awful lot like a tax....Or, Washington could give the permits away based on prior energy use, which would generate a massive corporate windfall.

Unless I'm missing something, this just isn't correct. It's true that John McCain hasn't taken a position on how to distribute permits — though his past history strongly suggests that he'll go for the "massive corporate windfall" version. But both Barack Obama and Hillary Clinton have proposed cap-and-trade systems that auction 100% of all greenhouse gas permits. This is the very thing that makes their plans noteworthy.

A 100% auction is one of those technical details that usually gets lost in the shuffle of a presidential campaign. But it's not just a detail. It's the thing that distinguishes a real cap-and-trade plan from a fake one. Both Democrats have the beginnings of a real plan. The Republican candidate doesn't.